Is a long-term CD worth opening this April?

The Federal Reserve met earlier in March and announced it would continue the rate pause it's had in place since the beginning of the year. The Fed's decision likely means that certificate of deposit (CD) rates will stay where they are for the time being, as CD rates tend to follow changes in the Fed's benchmark rate. For savers, that's good news, as CD rates remain high after peaking over the past couple of years. In fact, accounts with at least 4% are readily available from many banks. 

When you shop for CDs, you typically have two choices: long-term CDs with terms longer than one year and short-term CDs with terms of one year or less. Both options have fixed rates and guaranteed returns and are a low-risk way to invest your money. Long-term CDs are an interesting choice in the current economic environment because of their rates and the time commitment they require, which may lead you to wonder if they're a good option for you right now.

With that in mind, is opening a long-term CD worth it this April? Below, we'll break down what to consider.

See how much you could earn with a long-term CD here now.

Is a long-term CD worth opening this April?

Several factors make long-term CDs an interesting savings option this April:

You'll have more time to shop around

Thanks to the Fed's decision to keep interest rates paused and the fact that it won't meet again until May means that significant CD rate changes aren't likely to happen this April. Without the external pressure of any potential rate changes, savers have time to find a long-term CD with a competitive rate that meets their needs.

"The number one thing all savers should do to maximize CD returns is shop around," says Geri Hopkins, chief operations officer at Skyla Federal Credit Union. "Consider online banks and credit unions, as they typically offer significant rate advantages over large brick-and-mortar banks."

Not only do you have time to find the top long-term CD rates, but you also have time to build a CD strategy that includes long-term and short-term CDs, such as a CD ladder or CD barbell. 

Both strategies play to a long-term CD's strength — leveraging compound interest for an extended time — while balancing out a long-term CD's lack of liquidity (many CDs charge an early withdrawal penalty if you withdraw your money before maturity) with short-term CDs that give you access to your money when they mature in one year or less. 

Lock in your long-term CD returns now.

You can still earn a big return

Because CD rates will likely stay relatively high amid a Fed rate pause this April, you can lock in considerable returns through long-term CDs. Here's what you can earn from a $5,000 long-term CD at some of today's top rates, according to Bankrate:

• 18-month CD at 4.16%: $315.22 at maturity, for a total of $5,315.22
• 2-year CD at 4.15%: $423.61 at maturity, for a total of $5,423.61
• 3-year CD at 4.15%: $648.69 at maturity, for a total of $5,648.69

And here's what you could earn from a $10,000 long-term CD at some of today's top rates:

• 18-month CD at 4.16%: $630.45 at maturity, for a total of $10,630.45
• 2-year CD at 4.15%: $847.22 at maturity, for a total of $10,847.22
• 3-year CD at 4.15%: $1,297.38 at maturity, for a total of $11,297.38

Your money still needs protecting

The Fed is taking a wait-and-see approach to its rates as there's a level of uncertainty over where the economy is headed this April and beyond. Additionally, inflation is still running higher than the Fed would like it to, even though February's rate dropped slightly. The combination of those two factors means it's still important for savers to protect their cash from future market instability while maintaining a rate of return that outpaces inflation. 

Long-term CDs can accomplish both those goals this April, locking in rates that beat inflation right now and returns that will remain unchanged no matter what happens to the economy during your CD's term. 

Additionally, there's a sentiment among some economists that the Fed may lower rates later this year, although that's not a guarantee. If rates happen to fall later in 2025, after you opened your long-term CD, the rate you earn from the CD you open this April will remain the same.

"With new economic and geopolitical policies, and Fed rate cuts planned, I believe locking in a CD [rate] today in the mid to high 4s is a smart move for savers that won't need to use their savings for a year or two," Hopkins says.

The bottom line

Long-term CDs provide excellent returns over time because they give your deposit time to grow through compound interest. However, the main thing to keep in mind when you open a long-term CD is that many accounts charge early withdrawal penalties if you pull your money out before maturity. If you're worried about liquidity, Hopkins recommends a CD ladder. 

"Savers worried about locking up their money for extended periods of time should consider a CD ladder strategy as it provides cash liquidity on a regular monthly, quarterly, semi-annual, or even annual schedule," she says. "The longer the CD ladder, the more savers can take advantage of higher longer-term savings rate."